Yahoo: Change Isn't Always Good
Tim is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
First Bartz, then the hiring of new CEO Scott Thompson, and now co-founder Jerry Yang; the drama over at Yahoo (NASDAQ: YHOO) is getting to be more and more like a soap opera. Though it must be said no one is overly upset to see Mr. Yang go; certainly not investors who saw Yang as the stoic, never-say-change roadblock to Yahoo’s return to greatness.
As with Carol Bartz’ abrupt dismissal this past September, the announcement that Jerry has left the building was both sudden and expected, if that’s possible. Seen by many as the reason Yahoo has been unable to complete the sale of the company’s stake in Alibaba, and rid themselves of Yahoo Japan, the announcement gave Yahoo a much-needed shot in the arm. Already up around 2% for the day, it’d be surprising if YHOO doesn’t continue to bask in the glow of change, at least for a day or two.
Though it may seem cold, Yang is out and it’s time for investors to start thinking about what’s next. Mr. Thompson has a lot riding on his newly appointed CEO shoulders, and though he did some great things over at Paypal there really isn’t much for investors to hang their hat on just yet.
The talk of course will return to the sale of Yahoo’s Asian holdings. The inability to make that happen still eats at retail and institutional investors alike. As noted in a previous article, the question still remains – will a sale be the panacea many want it to be? Does the ouster of Yang and Bartz before him signal the turning of a new leaf with Mr. Thompson and a reinvigorated Board set to build Yahoo back into what it once was? Or, as others have speculated in the not-so-distant past, will the changes in management and sale of $17 billion in assets better position the company for a takeover?
A lot of Yahoo investors want nothing to do with the takeover talk; they’re sold on the company and ready to dig their heels in for the long haul. That’s to be commended and in all likelihood will be rewarded, at least in the near-term. Here’s why: a change in management was needed, clearly, and momentum will carry Yahoo up a bit in the immediate future. As talks once again heat up about the sale of the company’s Alibaba stake and Yahoo Japan, momentum will once again kick in lifting Yahoo even higher.
But if and when all that is said and done, it still leaves the investment community asking the same questions. How does Yahoo claw its way back, gaining market share from the likes of industry leading Google and Facebook? Google (NASDAQ: GOOG) has already established multiple lines of revenue and has the technological and industry edge in social networking, the Cloud and smartphone markets.
Change was and is needed at Yahoo, and now they have it. But along with the change come a lot of questions, questions a brand new CEO will need to answer. Even when sought, change isn’t always good. Let’s hope for Yahoo investors and aficionados this change is for the better.
The investment opinions included are just that, opinions. Tim is not a licensed investment professional, nor has he been for several years. Investing involves risk, as you well know, so consider your decisions wisely.